Bressler Risk Blog

“Paul Weiss Provided ‘Irreconcilably Conflicted’ Advice While Also Advising Tisch Family, Suit Alleges” —

• “A real estate company’s legal malpractice suit against Paul, Weiss, Rifkind, Wharton & Garrison alleges that the law firm’s advice was so ‘irreconcilably conflicted and flawed’ as a result of the firm’s connections to the Tisch family, that its former client was ordered to pay damages in underlying litigation.”
• “The malpractice lawsuit, filed in Manhattan Supreme Court late Thursday, was brought by Fairstead Capital Management and its two co-founders, Jeffrey Goldberg and Stuart Feldman. Marc Kasowitz of Kasowitz LLC represents the plaintiffs.”
• “The crux of the suit alleges egregious conflicts of interests, breach of fiduciary duty and deficient legal advice.”
• “In a statement, a Paul Weiss representative said: ‘Fairstead’s claims, asserted nearly four years after our representation ended, misrepresent basic facts, ignore binding court rulings and are baseless. We will vigorously contest them.'”
• “The suit alleges that in 2020, two Fairstead executives, William Blodgett and John Tatum, allegedly orchestrated a hostile scheme to either seize control of Fairstead or launch a rival enterprise using stolen, proprietary data.”
• “Fairstead retained Paul Weiss to facilitate the termination of the two executives and to protect the company’s assets, with senior Paul Weiss litigator Andrew Gordon handling the matter.”
• “According to the malpractice suit, Fairstead, in its initial forays to Paul Weiss, had referenced that the two executives they were trying to fire were being funded and assisted by the Tisch family office, a prominent New York legacy family with deep pockets. Blodgett was married into the Tisch/Sussman family.”
• “The complaint states that Paul Weiss failed to disclose that the Tisch family was a long-time and valued client of the firm, even after Fairstead stated that the Tisch family office was funding the executives in question. Gordon in particular handled issues for the Tisch family, the suit alleges.”
• “‘The same law firm that Fairstead hired to terminate Blodgett and Tatum and defend itself against the two employees (and their co-conspirators) who stole confidential computer files and were plotting to take over the company, was representing the billionaire family that was financing those employees’ scheme, receiving stolen computer files, advising the employees on strategy, and bankrolling the new competing venture,’ the lawsuit claims.”
• “Paul Weiss advised Fairstead to accept Tatum’s resignation instead of firing him for cause, according to the suit. Seven months later, Paul Weiss tried to retroactively terminate him for cause, which a Delaware court flagged as a bad-faith waiver of rights.”
• “In addition, the suit says that Paul Weiss advised that Blodgett be fired for cause but also put an economic incentive on the table. An arbiter later ruled that the dual-pronged approach was an improper pressure tactic, stopping Fairstead from clawing back equity that Blodgett had in Fairstead. The suit also states that Paul Weiss allegedly refused to seek court intervention to seize Blodgett’s tech containing stolen data. The firm instead sent letters, which allowed Blodgett to erase the company data from his phone at an Apple Store, the suit claims.”
• “In July 2022, after representing Fairstead for 10 months, the suit alleges that Paul Weiss abruptly ended its representation just prior to filing a lawsuit against Blodgett.”
• “The reason it withdrew, the lawsuit alleges, was that James Tisch told Brad Karp, then Paul Weiss’s chairman, that he ‘can’t have Paul Weiss suing the [Tisch] family,’ as the law firm was representing the Tisch family.”
• “‘The damage caused by that conflict was incalculable—for months, Fairstead had reposited its trust and confidence in an elite law firm that, unbeknownst to it, owed its primary loyalty to the family financing and supporting Fairstead’s adversaries. Indeed, Blodgett was a member of the very family that Paul Weiss represented,’ the suit claims.”

Perspectives from the client side: “Sub Agreements Do Not Override the OCG” —

• “There is a misconception that surfaces with enough regularity in legal spend advisory work to warrant addressing directly: the belief that a sub-agreement executed between a private equity firm and an offshore counsel — covering board support services, direct trustee services, or similar fiduciary mandates — operates as a standalone commercial arrangement, insulated from the expense governance standards set out in the firm’s outside counsel guidelines.”
• “It does not.”
• “Where a private equity or asset management institution has executed outside counsel guidelines with a law firm, those guidelines do not cease to apply at the jurisdictional boundary, nor are they suspended by the existence of a sub-agreement.
• “The OCG is the umbrella. Everything beneath it remains subject to its terms.”
• “Sub-agreements entered into with offshore counsel — whether in the Cayman Islands, the British Virgin Islands, Luxembourg, or elsewhere — typically govern the scope of specific mandated services. In the fiduciary context, this most commonly encompasses board support services and direct trustee services: the provision of independent directors, the administration of board governance, and related fund-level fiduciary functions.”
• “These arrangements are not entered into at arm’s length with a new, unconflicted counterparty. They are, in the overwhelming majority of cases, executed with a firm that has already signed the institution’s outside counsel guidelines.
• “Any sub-agreement executed by a firm that has signed the outside counsel guidelines is bound by those guidelines as a matter of contract. A subsequent, narrower agreement between the same parties does not displace the controlling terms of the OCG unless the OCG itself expressly permits such carve-outs — and properly drafted outside counsel guidelines do not.”
• “The problem, in our experience, is not typically wilful non-compliance. It is structural drift. Sub-agreements for fiduciary services are often negotiated by a different internal team — fund management, operations, or the fiduciary oversight function — rather than the legal operations or outside counsel management team that owns the OCG programme. The result is that the sub-agreement goes to signature without any cross-reference to the governing OCG, and the offshore firm begins invoicing under its standard billing practices rather than under the institutional guidelines it has already agreed to follow.”
  “By the time the discrepancy surfaces — if it surfaces at all — there is an established billing pattern, a relationship dynamic that makes correction feel disproportionate, and sometimes a position from the firm that its fiduciary services were never intended to be in scope of the OCG.”
• “It is worth stating, finally, that this issue carries particular weight on the fiduciary side of the business. Institutions operating as fiduciaries — or engaging service providers to discharge fiduciary functions — are held to a standard of cost consciousness that is not merely contractual but duties-based. Permitting offshore counsel engaged on fiduciary mandates to bill outside the terms of the governing OCG is not a minor administrative oversight. It is an expense governance failure that touches directly on the institution’s own fiduciary obligations to its fund investors.”
• “The OCG exists for this reason. It should be enforced accordingly — without exception, and without deference to the structural convenience of how a particular engagement was documented.”

“Big Law Insider Trading Scheme Shows Document Security Flaws” —

• “M&A lawyers’ use of confidential client data for alleged insider trading shows how Big Law document management systems can be a vulnerability for those intent on exploiting them.”
• “The spotlight on unauthorized access to confidential data is a result of criminal cases involving three attorneys accused of improperly accessing internal documents at seven different law firms. One of the three, Nicolo Nourafchan, pleaded not guilty Monday to charges that he led a massive ring that made tens of millions of dollars in illegal profits.”
• “According to US Securities and Exchange Commission charging documents, in 2018 Nourafchan described to one of his attorney co-defendants, Gabriel Gershowitz, how he obtained confidential information about mergers and acquisitions from his law firm’s document management system. Nourafchan searched the system using keywords and viewed documents in preview or read-only mode to minimize any electronic trail of his access to the files, the complaint said.”
• “In the wake of the high-profile case, legal experts are expecting firms to beef up security around their internal documents. ‘You can’t just have data there but then not secure it,’ said Christopher Ehrman, former director of the whistleblower office at the Commodity Futures Trading Commission.”
• “The scheme, which has resulted in securities fraud, money laundering and other charges against 30 people, shows the emphasis many law firms place on creating document systems that make it easy for attorneys to collaborate rather than erect safeguards that strictly limit access. Nourafchan, who worked at three Big Law firms between 2013 and 2023, illicitly accessed information on transactions, including about a dozen he wasn’t assigned to work on, prosecutors claim.”
• “‘For a multibillion-dollar M&A deal, there could be several people looking at that file,’ Pacifici said. Restricting access with so many lawyers who need to see a file could get ‘onerous,’ which explains firms’ hesitation to create strict barriers, he said.”
• “Firms do employ some safeguards. The SEC complaint revealed that law firms put code names on pending client transactions, such as ‘Project Mars,’ ‘Flying Cloud,’ and ‘Project Integrator.'”
• “To obtain sensitive deal information about other clients in a firm’s document management system, an associate would need to know what to look for after receiving a tip, Pacifici said, citing his experience at three Big Law firms. It’s rare in his past experience for firms to proactively put up a security fence blocking lawyers from accessing information about their colleagues’ clients, he said.”
• “‘Big Law and technology are dogs and cats,’ Pacifici said. ‘The people who are controlling these firms are very set in their ways.'”
• “Ehrman said firms should strengthen electronic boundaries on their data to ensure that attorneys aren’t able to view files for matters they aren’t working on. ‘A failure to prohibit the ability of people to lock down a file is to me highly irresponsible,’ he said.”
• “Law firm document systems should ‘identify who has access, and limit that access, and then monitor for anomalous and suspicious behavior,’ said David D’Agostino, vice president of managed cybersecurity services at Integris, an IT company that works with law firms. Behavior such as logging in after hours, or accessing or moving certain files, should ‘potentially trigger a notification and alert that would require investigation,’ he said.”

(I’m excited to take the wraps off of another interesting experiment from the Bressler Risk Blog: Sponsored Research. I’m running an arms-length, third party survey on a topic of interest to the sponsor of this exercise, Intapp. So for those of you working at law firms, looking for a way to help support the blog and my efforts, participating in the survey would be much appreciated! Details below.)

SURVEY TOPIC & LINK: “The Future of AI and Agentic Workflows in New Business Intake, Conflicts Management, and Client Evaluation.”

• This survey seeks to understand current attitudes and future aspirations of law firm risk, IT, operational, and business leaders regarding the application of Agentic AI to executing client evaluation, conflicts management, and new business intake.
• It covers several thematic areas around AI adoption and aspiration, specifically around risk operations — because why should the “practice of law” AI folks get to have all the fun?
• Area explored include:
  • Potential AI Use Cases — Business & Risk Evaluation
  • Strategic and Commercial Considerations
  • Perceived Value, Concerns, and Knowledge Gaps
  • Human Capital, Reskilling, and Organizational Impact
  • Future Outlook & Readiness

All (Law Firm) Takers Welcome!

For those still on the fence about these newfangled thinking machines (present company included), I want to encourage you to participate!

This isn’t a survey (just) designed for AI experts and enthusiasts. I want to dig in and understand what’s interesting, important, and even uncertain about the present and future of AI in the context of risk management operations.

Put otherwise, these questions are not asking whether you “trust” AI at this point in time. They are asking whether, assuming your firm has developed appropriate confidence in AI to execute a specific task or workflow, and the capabilities were made available, you/your firm would want to use AI to execute that task or workflow in practice.

• A Note on Survey Scope: This survey explores several risk management topics across the client evaluation lifecycle and is open to a variety of stakeholders. Please feel free to skip questions that do not relate to your area of personal responsibility, awareness, or opinion.
• A Note on Survey Confidentiality: Responses to this exercise will be kept confidential and no identifying information will be shared publicly, in the survey report, or with any third party.

Questions? Feel free to get in touch. You can use the blog form. Or if you’re reading the email updates, responding to this message will take you right to my inbox.

TAKE THE SURVEY HERE: https://www.surveyhero.com/c/ftuyrnkp

And please share with your colleagues! I’m hoping to get other stakeholders participating. Would love to get meaningful response and data from IG, finance, IT, firm management, practitioners, and beyond. There’s enough in here to engage those audiences.

Bill Freivogel is busy, as always:

• In re Northwest Trustee Servs, Inc., No. 86766-7-1 (Wash. App. Div. 1, June 1, 2026).
  • A law firm (“Law Firm A”), unable to pay its debts, was taken over by Receiver. Bank made a malpractice claim against Law Firm A. Law Firm A turned the malpractice claim over to its malpractice insurance company (“InsCo”).
  • InsCo agreed to defend Law Firm A under a reservation of rights. Because of the reservation of rights, Receiver hired two law firms (“Law Firms A & B”), as independent counsel, to defend the malpractice case.
  • The trial court found Law Firms A & B had a conflict, ordered them disqualified from representing Receiver, and denied them fees. The gist of the conflict claim was InsCo’s policy was being depleted by defense costs. In this opinion the appellate court reversed, finding Law Firms A & B had no conflict. Although InsCo’s insurance policy was paying the fees of Law Firms A & B, InsCo was not their client, and their only duties were to Receiver.
• State v. Teschner, 2025 WL 3439816 (N.J. App. Div. Dec. 1, 2025).
  • Prosecutors moved to disqualify one of Defendant’s lawyers (“Lawyer”) because Lawyer had previously, in a different matter, represented a person (“Witness”) who was slated to testify in this case. Witness’s mental condition was an issue in the earlier matter, and Defendant’s lawyers would raise Witness’s mental condition in this case in order to put in doubt Witness’s credibility.
  • The trial court disqualified Lawyer. In this opinion the appellate court affirmed. The court’s analysis was a straightforward discussion of N.J. Rule 1.9. Lawyer would have learned things in the earlier matter about Witness’s mental condition that would not otherwise have been available to Witness’s trial team in this case.
• Whitehead v. Cornerstone RX, LLC, No. 122899 (Okla. App. May 8, 2026).
  • The trial court disqualified the lawyer for defendants (“Lawyer”) and Lawyer’s law firm because Lawyer had previously represented Plaintiff. In this opinion the appellate court affirmed. The facts and the court’s application of Rule 1.9 are routine. What makes the case worth mentioning is its plain road map for analyzing former client conflicts in Oklahoma.
• Win v. Albou, 2026 QCCS 1920 (CanLII) (Super. Ct. Quebec May 8, 2026).
  • (Caution: We are relying upon a Perplexity translation for the following.) This is a suit by former W claiming former H stole her cryptocurrency worth about $1 million. H moved to disqualify the lawyer for W (“Lawyer”) because Lawyer had earlier represented both H and W jointly in their divorce.
  • In this opinion the court granted the motion. In the divorce matter there were extensive exchanges of information about the parties’ assets including discussions of cryptocurrency. In this opinion the court analyzed the ways in which those considerations could disadvantage H in this case.
  • While the court discussed Lawyer’s confidentiality duties, Lawyer’s duty of loyalty to H was the “main basis” for the disqualification. The court said a “secondary ground” for disqualification was the likely need for Lawyer to testify in this case.
• Fabyanske Westra Hart & Thomson PA v. Western Nat’l Mut. Ins. Co., No. A25-1640 (Minn. App. June 1, 2026).
  • Husband was killed and Wife was severely injured when their motorcycle crashed in a construction zone. Wife sued Contractor and Subcontractor (“Sub”) of the construction zone. Sub had a CGL policy with InsCo. Contractor was an additional insured.
  • InsCo issued a reservation of rights to Contractor because Contractor was insured only for vicarious liability, not its own. Then followed a convoluted series of procedures, which we need not detail.
  • Contractor wound up with independent counsel, believing InsCo’s retained counsel would be in a position to handle liability issues causing Contractor to be uninsured. The trial court found InsCo need not compensate Contractor for hiring independent counsel. In this opinion the appellate court reversed, holding retained counsel had a conflict because retained counsel could have positioned Contractor into being uninsured. Thus, InsCo had to pay for independent counsel.

“Judge Who Is Former Public Defender Office Bureau Chief Disqualified From Previously Supervised Cases: Judicial Ethics Opinion 25-189” —

• “Where a judge was formerly a supervisory-level attorney at an institutional defenders office, we have said the judge need not disqualify from all pending matters in which that office appears. Instead, the judge is permanently disqualified, without the possibility of remittal, in cases in which he/she participated as an attorney in any way, either personally or as a supervisor. This includes cases handled by attorneys subject to the judge’s supervision during the judge’s tenure, whether or not the judge recalls any ‘personal’ involvement. The judge is also disqualified, subject to remittal, from presiding in matters involving former clients for a period of two years from the end of the judge’s employment with the office. The judge’s obligation when presiding over other matters involving former colleagues from the institutional defenders office depends upon the nature of their relationship. If the judge maintains a continuing personal relationship with the former colleague, it should be assessed using the categories of Opinion 11-125 as a guide.”
• “Conclusion: A judge who previously served as bureau chief for the county’s public defender need not disqualify in all matters being handled by that office. Instead:
  • (1) The judge is permanently disqualified without the possibility of remittal in all matters in which the judge participated as an attorney in any way, either personally or as a supervisor. As always, this includes cases that were being handled by attorneys under the judge’s chain of command.
  • (2) The judge is disqualified, subject to remittal, from all matters involving former clients for a period of two years from the end of his/her employment with the public defender.
  • (3) The judge’s obligation in other matters involving former colleagues from the public defender’s office depends on the nature of their continuing personal relationship, if any.”

“Lawyers’ Self-Compassion Is Crucial for Firms’ Risk Management” —

• “Self-compassion and freedom from the inner critic aren’t wellness or well-being concepts; for companies, they are risk management tools that can help the bottom line. That distinction matters, and the legal profession hasn’t yet made it.”
• “Rigorously defined, self-compassion is the capacity to acknowledge error honestly without engaging in relentless self-criticism. It’s the cognitive ability to look clearly at a setback or mistake, extract useful takeaways, and return to pursuing one’s goals. The highest form of self-compassion is staying aligned with your values in any situation.”
• “Lawyers who can’t do this make worse decisions, communicate less honestly, and are more likely to engage in the conduct that drives malpractice claims and bar complaints. Lawyers who learn to process failures in a healthy way will be better at their work—and will be able to better help others.”
• “Consider what actually precedes most malpractice claims and bar complaints:”
• “Errors of overconfidence: a lawyer who does not acknowledge what they don’t know.”
• “Concealment of mistakes: a lawyer too ashamed to surface a problem while it is still correctable.”
• “Failure to accept course corrections from clients or colleagues: a lawyer whose self-protective response to criticism shuts down the ability to act on new information.”
• “These are failures of self-regulation under pressure, not failures of competence. It has more to do with the nervous system than intelligence. The research on self-compassion and the inner critic maps directly onto them.”
• “Studies have found that individuals higher in self-compassion are more willing to acknowledge mistakes, more receptive to critical feedback, more likely to take responsibility without defensive collapse, and faster to recover and return to clear functioning. A 2025 study found that people with higher self-compassion made better decisions under high-stakes uncertainty, showing less preoccupation with loss-avoidance and more capacity for sound cost-benefit analysis.”
• “Lawyers who can process failure cleanly aren’t just healthier. They are better lawyers who follow the Model Rules of Professional Conduct with more ease.”
• “A lawyer’s inner critic tells them that punishing themselves for mistakes is what prevents future ones, but the data suggests otherwise. NALP’s 2025 Lawyer Perfectionism and Well-Being Survey found that perfectionism is linked to resistance to feedback, reduced engagement, and diminished longevity in the profession.”
• “Self-compassion breaks that cycle. It allows lawyers to be accountable in ways that are honest, and proportionate, and followed by return to effectiveness rather than extended self-punishment.”
• “Daily compassion meditation is a practical starting point—yes, even for lawyers. Another good test is what researchers call the colleague standard. After a setback, respond to yourself the way you would respond to a capable colleague in the same situation: with the accurate, useful, forward-looking assessment you would give someone you respect.”
• “Most lawyers may find this unfamiliar at first. That gap between how lawyers treat others whom they respect and how they treat themselves is where the risk lives.”
• “The profession doesn’t need lower standards. It needs lawyers who can meet high standards sustainably, surface errors early, accept correction without collapse, and return to full judgment after hard moments. When properly understood, that is what self-compassion produces.”

Dear Ethics Lawyer explores: “Potential Waiver of Multiple Bidder Conflict” —

• “Q. Dear Ethics Lawyer, I am a banking lawyer who frequently handles acquisitions of banks or branches of banks. Recently, a family-owned bank group in our region has quietly let it be known that it would entertain offers to sell. One of our clients, let’s call them Bank A, contacted me a few days ago to assist them in preparing the legal documents for a bid to purchase it involving a combination of cash and stock. Today another prospective client, Bank B, has contacted one of my partners to assist them in preparing a bid.”
• “I seem to recall from one of your prior columns that this could be a conflict. If so, can’t we just get waivers from both bank groups to allow us to use separate teams of lawyers to assist each bid, each walled off from the other? We won’t be advising on the amount of either bid; our role in each will simply be to prepare a legal offering package, and if successful (in which case, we’d only be representing one of them), the acquisition documents.”
• A: Under Rule 1.7(a)(2), a ‘material limitation’ conflict exists when there is a ‘significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client.’ Here, your firm would be assisting two clients in a ‘zero sum’ bidding war, that only of them can win. And even though you indicate that you will not be determining the amount of the bid, you will have knowledge of each bid’s amount and perhaps other terms and conditions that if known by one or the other of your prospective clients could be used to enhance their bid to the detriment of the other. This is a conflict as you suspect.”
• “Your follow-up question about obtaining a waiver to allow two separate walled-off teams of lawyers to independently advise the two clients in making their respective bids presents an interesting scenario, but one that you should approach very carefully, if at all. As with other concurrent conflicts, ‘material limitation’ conflicts are waivable by the affected clients, i.e., the representation can be undertaken, if the four elements set forth in Rule 1.7(b) are met. As applied to this situation, Rule 1.7(b)(2) and (3) are met or do not apply, leaving 1.7(b)(1) and (4) to satisfy. Rule 1.7(b)(1) requires that the lawyers involved reasonably believe that they will be able to provide competent and diligent representation to each affected client. So, for example, you should consider whether each of your teams could be effectively and completely walled off from the other (as to communications, files, documents, etc.) but still have the necessary expertise and strength to meet the competence and diligence standards. This determination carries risk of a losing bidder later claiming that they were not given the same resources or that some ‘leak’ in the ‘wall’ occurred. Equally as important, you also must consider whether the lawyers can truly do their best for each client, given their own and the firm’s respective economic and other interests in maintaining them as clients. This element must be considered carefully and is another source of risk.”
• “Perhaps even more significantly, Rule 1.7(b)(4) requires that each client give informed consent, confirmed in writing. ‘Informed consent’ is defined in Rule 1.0(e) as ‘agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.’ It is difficult to see why either entity would agree for their law firm to advise a competing bidder. In addition, this requirement may well present a catch-22 in the situation you describe. In order to obtain informed consent from each of these clients to the ‘separate team’ representation, you would need to advise each about the existence and identity of the other as a prospective bidder, yet Rule 1.6 prohibits you from revealing information pertaining to the representation of either of them without their consent. Thus, even asking for informed consent would reveal the existence of another bidder in a way that either or both may not wish to have disclosed.”

“With LMEs Primed for Growth, Will Consolidation Among Clients and Firms Come With Risk?” —

• “Liability management has the hallmarks of a sought-after practice. Better still, it’s primed for growth, thanks to a robust demand for debt and interest rates that remain elevated after initial COVID-era increases. ‘At the end of the day, this practice is going to grow. It’s been growing at an exponential rate that is almost hard to describe when you look at it,’ said Sullivan & Cromwell capital solutions practice co-head Ari Blaut. ‘It’s kind of a rocket ship.'”
• “But the contentious nature of some coercive liability management exercises (LMEs) exposes the practice to an industry trend that may require extra care in the future: consolidation.”
• “Although LME work is largely concentrated among a handful of top firms, those firms are among a cohort that is pulling away from the rest of the Am Law 100 in terms of size, profitability and market dominance.”
• “The consolidation trend for firms and clients increases the potential for conflicts of interest as a small cadre of law firms increasingly represents a shrinking number of private capital firms, some of whom may be clients in some matters and counterparties in others.”
• “Liability management isn’t unique in its ability to present such conflicts, which exist in other transactions and litigation as well, and many firms have become adept at managing ethical conflicts through waivers.”
• “But business conflicts could prove trickier with LMEs, especially in coercive transactions where some lenders run the risk of major losses.”
• “‘Whenever you have nonconsensual LME these days you have to think there is a real litigation risk,’ Blaut said. ‘People are going to file it whether or not they necessarily have a leg to stand on. Part of it is nobody wants to be on the losing end of something.'”
• “After such a conflict led Kirkland & Ellis to change course with its LME practice this winter — a move that preceded the departures of LME specialist David Nemecek and six other LME partners to Simpson Thacher & Bartlett — top LME practitioners urged caution in firms’ choice of clients and methods of negotiation.”
• “‘We touch almost all these institutions on the credit side, and we may have relationships with others,’ said Gibson, Dunn & Crutcher global business restructuring chair Scott Greenberg. ‘If it’s a true conflict where we can’t be adverse to a sponsor, we’ll pass on the mandate.'”
  No Windmill Dunks”
• “While leading LME practitioners acknowledged the risk of conflicts, they broadly said such conflicts can be avoided by effectively screening new matters for potential conflicts at the outset.”
• “‘We do bring in conflict counsel on a lot of our LME deals, and we are very careful when we take on these matters in making sure clients know what conflict counsel is there to do, what we can and can’t do from a conflicts perspective, and to make sure we comply with our engagement letters,’ Blaut said. ‘It’s no different from any other transaction.'”
• “Additionally, LME lawyers urged the need to handle contentious deals as respectfully and professionally as possible.”
• “‘There are repeat players in this, and I do think that your reputation is important,’ said Justin Lee, global head of liability management and strategic capital solutions at Weil, Gotshal & Manges. ‘The way you handle yourself, the way you roll out deals, the way you thoughtfully engage with counterparties is always going to be important.'”

“Plaintiffs’ attorney offers to exit loanDepot class action over conflict of interest” —

• “Ari Karen, a partner at Mitchell Sandler PLLC, has submitted a motion to withdraw as counsel for borrowers who filed a class-action lawsuit against loanDepot in July 2025 amid a dispute over conflicts of interest.”
• “loanDepot filed a motion in November 2025 to disqualify Karen and his law firm, citing the ‘presence of significant ethical conflicts’ in a case where the lender faces accusations of steering and violation of the loan officer compensation rule.”
• “The potential conflict stems from Karen’s previous representation of Sean Johnson, a former loanDepot loan officer. Karen defended Johnson in a February 2022 arbitration after the lender accused him of breach of contract and poaching when he left to join Movement Mortgage. Karen also later served as the defense attorney for Movement in a related lawsuit filed by loanDepot in Delaware.”
• “Crucially, Johnson is the loan officer who originated the loans for the four named plaintiffs in the current class action — Nathan Johnson, Rachel DeBaun, Nathan Moor and Shawn Derrick.”
• “U.S. District Court Judge Julie R. Rubin signaled on June 1 that she would disqualify Karen and Mitchell Sandler from the loanDepot class-action case unless they produced valid conflict-of-interest waivers from the former clients.”
• “‘Absent competent waivers, Mr. Karen and his firm are operating under material conflicts of interest in the representation of Plaintiffs and putative class members in this case,’ Rubin wrote in her memorandum opinion.”
• “In a response filed the following day, Karen stated that although he had already obtained waivers from the former clients, he believed the ‘Plaintiffs’ interests are best served by withdrawing from this litigation and allowing the case to proceed with current Co-Counsel Michael Paul Smith and Smith, Gildea & Schmidt, LLC’s representation.'”
• “‘The firm and its ethics expert believe that the facts and law permit the firm’s representation of the Plaintiffs consistent with its ethical obligations and that such a determination could have been reached without further consideration by the court,’ Karen said in a statement given to HousingWire.”
• “‘However, the firm believes that it is in the Plaintiffs’ best interests for it to withdraw from the case to prevent these distractions from undermining the Plaintiffs’ ability to pursue the serious legal claims against loanDepot on behalf of the putative class.'”
• “In a court filing on Wednesday, the company also wrote that ‘Mr. Karen was informed of this serious conflict of interest nine months ago and therefore had ample time to confer with his Former Clients or withdraw; he instead forced loanDepot and this Court to expend significant resources to address this issue, but now asks the Court to wipe the slate clean without reviewing the waivers he supposedly has obtained already.”
• “‘Despite the troubling nature of this engagement, loanDepot will consent to the withdrawal of Mr. Karen and Mitchell Sandler PLLC, provided the Court clarifies in its order that they are barred from any further involvement in this case, which Mr. Karen’s proposed order fails to address,’ the filing added.”
• “Because the plaintiffs are accusing loanDepot of steering violations under the Truth in Lending Act (TILA), the court noted that Karen’s current representation could expose his former clients — including Johnson — to civil and criminal liability using confidential information he gained while representing them.”
• “In her decision, Rubin detailed how the current and prior litigation are substantially related, pointing out the inherent ethical dilemma Karen faces.”
• “‘Plaintiffs do not address the obvious scenario where Mr. Johnson is deposed by Defendant or called as a witness at trial, which would place Mr. Karen in the untenable position of having to examine his Former Client, Mr. Johnson, to establish that he — as Plaintiffs’ loan officer — steered Plaintiffs ‘towards mortgage loans that contained higher rates and less favorable terms,’ as expressly alleged at paragraph 76(b) of the Amended Complaint,’ Rubin wrote.”
• “According to the judge’s memorandum opinion, loanDepot asserted that because Johnson originated the mortgages for all four named plaintiffs, he had access to confidential information concerning the loans — including borrower names, loan numbers and compensation. The lender argued that Karen naturally would have learned this information through his representation of Johnson.”
• “Rubin, however, said in her decision that ‘the court finds that the Johnson Arbitration (and the other arbitration proceedings in which Mr. Karen served as counsel for at least one other former loanDepot loan officer) and the current action are substantially related, and that Mr. Karen had access to, and likely obtained, confidential information through his representations of the Former Clients in the arbitration proceedings, including the Johnson Arbitration, and that such information would advance Plaintiffs’ position here.'”

“Non-Clients Say Katten Attys’ ‘Double-Cross’ Bars Immunity” —

• “Two onetime Katten Muchin Rosenman LLP attorneys accused of violating a joint defense agreement in a federal criminal healthcare fraud investigation should not be able to avail themselves of a Texas attorney immunity doctrine, according to two co-defendants who allege they were offered as ‘sacrificial lambs’ in a ‘double-cross that would make good fiction.'”
• “Plaintiffs John E. Grisham and Rob Wilburn pushed back Friday against a Texas Supreme Court bid from attorneys Barrett Howell and Ryan Meyer to review a lower appellate court opinion that permitted a suit against them to go forward. Howell has since left Katten and is in solo practice, while Meyer is based in Katten’s Dallas office.”
• “Grisham and Wilburn claim they would have never been indicted in the Northern District of Texas if attorneys Howell and Meyer, who represented James Courville, had not breached their agreement to present a united defense. Courville, who acted as a confidential informant, was never charged, and the indictment charging Grisham and Wilburn was ultimately dismissed.”
• “Grisham and Wilburn said in a Friday response that the lawyers engaged in wrongful conduct outside the scope of their representation of Courville and are now attempting ‘to cast themselves as lawyers who zealously represented their client and strategically had their client act as a confidential informant’ while ignoring that they were in a ‘defense agreement for over two years with plaintiffs [and] then lied, cheated, and stole.'”
• “Howell and Meyer were on Katten’s roster when they represented Courville in a 2019 federal criminal investigation involving blood and genetic testing company Trinity Clinical Laboratory, which was partly owned by Courville, Grisham and Wilburn.”
• “Grisham and Wilburn allege the Katten lawyers are liable for fraud and misrepresentation, breach of fiduciary duty, violation of the Deceptive Trade Practices Act, breach of contract, negligence, aiding and abetting, and conspiracy.”
• “In support of their claims of wrongdoing, Grisham and Wilburn pointed to the federal misdemeanor convictions of Howell and former Assistant U.S. Attorney Carlos A. Lopez for destroying evidence in the case. Both Howell and Lopez pled guilty in February to deleting text messages after a federal judge ordered their production in 2023. Grisham and Wilburn had sought the records to prove their joint defense agreement had been violated, court records show.”
• “‘This is not a legal malpractice case, nor is it a case where plaintiffs sue opposing counsel,’ Grisham and Wilburn said. ‘Instead, it is a case seeking to hold [Howell and Meyer] liable for the substantial damage they caused not only by refusing to honor their agreements, but by actively undercutting those agreements and offering the real parties in interest as sacrificial lambs to an overzealous prosecutor.'”
• “Grisham and Wilburn said the relationship between Grisham, Wilburn and Courville was not ‘sufficiently adversarial’ to support attorney immunity given the facts and circumstances.”
• “‘When the attorney immunity doctrine applies, it is because the relationships between the non-client, the client, and the attorney fall into clearly defined sides — the client and the non-client are clearly ‘adversarial’ to one another, and the attorney is clearly facilitating his client’s mission (often to the non-client’s known detriment),’ Grisham and Wilburn said. ‘However, the opposite is true when the attorney and his client lead the non-client to believe that the attorney is looking out not only for his client’s interests but also for the non-client’s (often against a mutual adversary).'”
• “Grisham and Wilburn claim ‘they were taken advantage of by the very attorneys who had represented to them that they were working together to defeat these charges.'”
• “‘Under these facts, the attorney immunity defense is unavailable, the trial court correctly denied the Rule 91a motion, and the Court of Appeals correctly upheld that denial,’ Grisham and Wilburn said. ‘This court must follow suit to protect both the legal profession and the citizens who rely on it.'”

David Kluft asks: “If all the local lawyers were conflicted, can I base my fee request on national rates?” —

• “A MT contractor was part of a big dispute with Exxon over the construction of an oil refinery in Billings. The contractor tried to hire MT counsel capable of handling a complex construction dispute, but all the firms big enough to do the job were conflicted because they already represented Exxon itself or the other subcontractors that were party to the dispute.”
• “Instead, the contractor hired some big firm lawyers from DC, NYC and Denver. The contractor won the case and asked for attorneys’ fees. Exxon argued that the usual default rule requires the Court to adjust the big firm national rates of the contractor’s lawyers downward to rates of the ‘relevant community,’ i.e., Billings, MT.”
• “The Court disagreed and found that it was appropriate to depart from the usual default rule in this case and regard the ‘relevant community’ as the ‘national bar’ because of the unavailability of unconflicted MT counsel and because of the specialized construction litigation expertise of the lawyers who were retained.”
• Decision: here.

“Clark Hill Exits NJ Health Noncompete Dispute After DQ Bid” —

• “A New Jersey federal judge has signed off on a request from Clark Hill PLC to withdraw as counsel for a nursing home operator amid an adversary’s disqualification motion in a noncompete dispute with a medical consulting company.”
• “The ruling concluded a dispute over whether Clark Hill faced a conflict of interest because of its past representation of Atlas co-defendant Christopher Savino, a former Marquis Health Consulting Services LLC employee accused of violating a noncompete agreement after leaving the company to work for Atlas.”
• “Clark Hill rejected Marquis Health’s conflict allegations in a March filing, arguing there was no violation of New Jersey’s Rules of Professional Conduct because Savino and Atlas remained aligned on the core claims in Marquis’ first amended complaint.”
• “The firm argued that there was no conflict because it did not have confidential information from Savino. But after appearing before Judge Day on May 12 for argument on Marquis’ disqualification motion, Clark Hill moved the next day to withdraw from representing Atlas entirely.”
• “In the May 13 filing, Clark Hill attorney Vanessa M. Kelly told the court that Atlas had consented to the substitution and had retained Fox Rothschild to take over the matter. Kelly further told the court that Fox Rothschild already had entered a partial appearance in the litigation concerning Savino’s crossclaims and would now ‘be taking over the entirety of this case.'”

“Connecticut’s biggest law firm defuses ethics dispute involving former chief justice” —

• “The state’s biggest law firm has avoided an embarrassing legal fight over whether it broke a fundamental ethics rule by asking former Chief Justice Richard Robinson, then a recently hired partner, to work on an appeal in a case that had been argued before him previously when he led the Supreme Court.”
• “Day Pitney filed papers in Superior Court in Hartford Wednesday withdrawing as plaintiff’s counsel in a hard-fought, 13-year old contract dispute between partners breaking up their private equity firm. The motion to withdraw was filed after the judge presiding over the suit scheduled a mid-June hearing on a demand by opposing counsel to have Day Pitney disqualified for an ethics violation involving Robinson.”
• “‘In light of Day Pitney’s withdrawal of its appearance, the Court should cancel the evidentiary hearing scheduled for June 16 and 17, 2026 on the Defendants’ motion to disqualify Day Pitney,’ the motion to withdraw said. ‘The withdrawal renders the Defendants’ motion to disqualify moot.'”
  “In the suit underlying the disqualification fight, CCP Equity Partners founder and Day Pitney client John Clinton sued three other partners, who are represented by West Hartford attorney Garrett Flynn, along with Barbara Schellenberg and David Sabel of New Haven.”
• “The suit has reached the state Supreme Court twice. On the first occasion, in 2022, Robinson was chief justice and led the panel that heard arguments. The court did not issue a decision that time. After conferring, Robinson and the other justices returned the case to the lower court for further proceedings.”
• “Robinson joined Day Pitney after retiring from the Supreme Court in 2024. Billing records show he was involved with the case soon after, as the firm prepared to bring it to the Supreme Court a second time. That time the justices – three of whom sat with Robinson during the earlier appeal – ruled on the merits of the case. They returned it to Superior Court again for a new trial, which is now scheduled for November.”
• “The partners represented by Flynn moved in late February to have Robinson and Day Pitney disqualified for violating a rule of conduct that bars judges from involvement in cases over which they formerly presided.”
• “The Connecticut Rules of Professional Conduct for lawyers say ‘a lawyer shall not represent anyone in connection with a matter in which the lawyer participated personally and substantially as a judge . . . unless all parties to the proceeding give informed consent, confirmed in writing.'”
  “The partners claim in a court filing that Robinson gave Day Pitney an unfair advantage because he could provide insight into how the other justices viewed contract law as applied to a case being prepared for the Supreme Court a second time.”
• “Day Pitney opposed disqualification. It acknowledged a violation of the rules of conduct, but claimed that Robinson’s contribution to the appeal was so inconsequential that a legal sanction punishing anyone for an ethics violation would not be justified.”
• “Records filed with the court show Robison billed 15.7 hours to the case at $1,110 an hour.”
• “‘Contrary to the Defendants’ speculation, Chief Justice Robinson’s contributions to Day Pitney’s representation of Clinton were minimal and immaterial. Therefore, his prior judicial role should not disqualify the entire firm from continuing to represent Clinton,’ Day Pitney told the court”

I just discovered “Dear Ethics Lawyer” from Mark Hinderks at Stinson. Here’s an interesting recent piece on: “Positional Conflicts” —

• “Q: Dear Ethics Lawyer, I am handling a significant case in which I am preparing to argue to a federal district court in our state that a state law cause of action against our client under relatively recent legislation is preempted by federal law. I’ve just learned that one of my partners in the firm is coincidentally preparing to argue in state court on behalf of a different client that preemption does not apply.”
• “I discovered this by accident, given that our firm (similar to other firms) does not track the specific legal arguments being made over time in individual cases as part of its conflict-checking system. Now that I know about it, what do I do? Is this an actual conflict, or something that will just be difficult to explain to the clients if they find out we are arguing both sides of the same argument at the same time?”
• “A: Positional or issue conflicts occur when a lawyer (or firm) is advocating a substantive position in one matter that could be detrimental to the interests of another client in a different matter. This situation raises questions such as whether the first decision rendered will be persuasive or even binding precedent affecting the other case; whether the judge(s) will discount the lawyers’ advocacy knowing the firm is on both sides of the issue; and whether the clients will be concerned by, or even subject to divided loyalties of the lawyers involved?”
• “The issue is dealt with to a certain extent in Model Rule 1.7, Comment 24, which states that ordinarily ‘a lawyer may take inconsistent legal positions in different tribunals at different times on behalf of different clients,’ and that the ‘mere fact’ that precedent might be created adverse to the interest of a client in an unrelated matter does not create a conflict of interest. If, however, there is a significant risk that the advocacy for one client will materially limit the lawyer’s effectiveness for another client in a different case, then a conflict will exist.”
• “Formal Ethics Op. 93-377 (1993) also looks at the issue primarily in the framework of a material limitation conflict under Rule 1.7(a)(2). Is the importance of the issue likely to affect the ultimate outcomes? Is the determination in one case likely to have a significant impact on the determination in the other? Will there be any ‘inclination by the lawyer, or her firm, to ‘soft pedal,’ de-emphasize or alter certain arguments to avoid impacting the other case?’ It concludes on the one hand that a conflict does exist when a lawyer or firm argues opposing substantive positions in the same jurisdiction at the same time; and on the other hand that no conflict exists when the matters are not litigated in the same jurisdiction and there is no substantial risk that either representation will be adversely affected by the other. Of course, there is a huge gray area between these two outcomes, in which the lawyer(s)/firm involved must examine the factors referenced above as to whether a material limitation conflict exists.”
• “There is also the matter of whether the matter should be disclosed to affected clients, especially if the decision is to proceed with both representations. As a practical matter, disclosure and consent (where disclosure may be made, and consent obtained under Rule 1.7(b)) may cure both any actual conflict of interest and inoculate the firm against client surprise and disappointment upon learning its lawyer or firm is arguing a position adverse to its interest.”
• “In the situation you describe above, the two matters are not in the same jurisdiction (one is in state court, the other federal), but are in the same state, where decisions of state and federal courts on a legal issue are likely to have significant influence, one upon the other. You should consider whether either representation is likely to adversely affect the other given the importance of the issue involved, and whether there is any other material limitation on the ability of you and your partner to vigorously present your arguments in the interests of your respective clients, and to have them fairly received by the courts involved. The safe route is either not to knowingly proceed with both matters, or to obtain informed consent if possible from the affected clients.”

“Nelson Mullins Faces $2B Suits Over Alleged Conflicts” —

• “The former wives of two insurance mogul brothers have sued Nelson Mullins Riley & Scarborough LLP for $2 billion, claiming a partner there set up the couples’ estates while quietly conspiring with the brothers to shield marital assets from the wives in the event of divorce.”
• “In two nearly identical suits filed Wednesday in West Palm Beach, Florida, Michelle Waite and Sandra Cohen, who were married to Seth and Brad Cohen, respectively, said Nelson Mullins partner Jonathan Gopman jointly represented them with their husbands when he helped do their estate planning.”
• “But he then worked against the wives’ interests by taking steps with the Cohen brothers, who founded Insurance Care Direct, to cut the wives out of their shares of the marital assets without communicating with the women.”
• “Waite and Sandra Cohen estimate they were denied between $500 million and $1 billion each in what should have been their fair share of the marital assets in their divorces.”
• “Gopman placed marital assets outside the women’s reach, including through complex and unnecessary corporate restructurings and the establishment of foreign trusts, according to the suit. He also helped the brothers secret away marital assets over the course of several years, according to the suit.”
• “Gopman was at Akerman LLP in 2015 when he helped the couples set up their estates, according to the suit. He joined Nelson Mullins in July 2021.”
• “The ex-wives allege that the law firm knew Gopman had previously represented each couple jointly, but agreed to represent the brothers in their respective divorces despite the conflicts of interest.”
• “‘Because Nelson Mullins was involved as counsel in the divorce proceedings, as well as having its own counsel to defend Gopman and its interests in those same proceedings, Nelson Mullins was fully aware of the conflict of interests involved,’ the ex-wives said.”
• “Nelson Mullins also helped the brothers set up a new entity, Entratus LLC, which claimed ownership of the proprietary intellectual property developed over several years at ICD entities, according to the suit.”